Wednesday, July 31, 2013

Chronic Unemployment and some appropriate new policies

I came across this article from a Czech website about Andre Gorz and a few other European thinkers that don't have much exposure in the English speaking world. It quotes Wassily Leontief, a nobel laureate in economics:

Adam and Eve enjoyed, before they were expelled from Paradise, a high
standard of living without working. After their expulsion they and their
successors were condemned to eke out a miserable existence, working
from dawn to dusk. The history of technological progress over the past
200 years is essentially the story of the human species working its way
slowly back into Paradise. What would happen, however, if we suddenly
found ourselves in it? With all goods and services provided without
work, no one would be gainfully employed. Being unemployed means
receiving no wages. As a result until appropriate new income policies
were formulated to fit the changed technological conditions everyone
would starve in Paradise.

Gorz argues that since WWII full employment has become incompatible with increasing productivity, thanks mainly to the reliance on automation. He backs it up with some studies done in Germany:

Here are some figures about the economy in formerly communist Saxony. In 2004, after investment of 1.41 billion euros in the region's 300 chemical factories, the region was producing about the same volume as it had in 1989. Only a tenth of the number of employees were required.

Another study of the number of jobs created by investment in industry in West German shows a similar trend:

What sort of "appropriate new income policies" does Gorz advocate? A reduction in working hours. How much of a reduction? In the case of Saxony, a 90% reduction seems called for. Gorz also calls for a social wage or universal dole to be paid to everyone regardless of employment status or merit. It seems to make sense, yet no politician I'm aware of is calling for such measures. I don't think there is much call from the public for them either.

Here it is public. Can't say now you've never come across this solution to chronic unemployment.